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It is absolutely critical to have a merchant
account so people can buy your product or service with their credit card.
There are however, a couple of different ways to this:
- You can get your own Visa/Mastercard/AmEx/Discover
accounts with a local bank.
- You get Visa/Mastercard/AmEx/Discover accounts through a
broker.
- You can hire a fulfillment house and use their credit card
accounts.
- You can use a payment type such as Cybercash or First
Virtual.
- U can use a 3rd party billing company in other words, use
someone else's merchant credit card accounts for a fee.
Details of #1: If you have a very good relationship with your
bank, and they don't require a security deposit, it is best to get the
merchant credit card accounts through them. Because some banks only deal
with two out of the four major credit card types, you may have to deal with
two different banks to be able to process all four major credit card types
(usually one bank will have Visa and Mastercard, and another will
have AmEx and Discover).
The problem with local banks is they are set up to
serve retail stores and not mail order or Internet based businesses so they
either charge a very high "discount rate" or require a very large
security deposit (between $5,000 - $10,000). For those that don't know what
a discount rate is, this is the percentage you pay on each transaction for
the privilege of using their credit card services. In other words, if you
have a discount rate of 2.5 % and you put through a sale of $100.00 you
will only receive $97.50 and $2.50 goes directly to the credit card
company.
Details of #2: Going through a broker is my personal
preference. It is usually very easy to get approved, there are no security
deposits required, and they can get you a great discount rate. I personally
recommend a company called Total Merchant Accounts.
They are Internet based and you can apply directly
online. They specialize in getting credit card accounts for online
businesses (even adult oriented sites). They have a 98% approval rate. Even
if you have been bankrupt, chances are that they can probably get you
approved. We have had great success and I highly recommend them. They
charge a $125 application fee (all brokers charge a fee to set you up this
is how they make their money don't worry, it is fully refundable if you are
declined). Some others charge as much as $400.00.
The only other expense will be that you need a
terminal, software product, or web-based software (whatever you decide) to
process the credit cards (yes, this software will process the credit cards
in real-time, all automatically, just like my order system does that I
explained above). You can buy this outright for about $900.00, but you can
also lease it from them for about $40 a month (this is what we do and
this is what I recommend you do). You should be able to get a discount
rate of 2% to 3%. So basically you get merchant accounts for $125 up-front
and $40 a month. This is very cheap. If you plan to do business online,
this is the best way to go. What is $40 a month if you plan to be
generating thousands in sales each month?
If you don't want to use Total Merchant
Accounts, there are literally hundreds of different brokers out there.
However, be careful as there are a few that will take your application fee
and give you the run-around. We recommend Total Merchant Accounts,
as they specialize in online and home based business and we have used them
for years with great success (plus they will bend over backward to help
you). Click here to apply.
This form is not a "formal" application.
It goes to Ed Freeman at Total Merchant Accounts (which is the
"broker", not the "bank"). This is to help him
understand what type of business you are in and a little about your company
(so he knows the best way to fill out the formal application that goes to
the bank for approval). Just fill out this "pre-application form"
at the URL above as best you can (if you leave a few fields blank, don't
worry, the bank will never see this "pre-application form"). Once
Total Merchant Account receives your pre-application by email, they
will contact you within 48 hours to go over some specifics and get out a
formal contract to you so that they can set up the details with the bank.
It is super easy and takes almost no time at all. I highly recommend them.
Note: As mentioned above, you will be required to
lease a processing terminal to "swipe" the credit cards. You have
the option of a stationary terminal or a software program called Total
Merchant Manager. Make sure you lease the software as this will allow you
to render credit cards through a secure server as well as process them
manually through your home computer. Don't worry, this is simple software
to operate.
Details
of #3: A fulfillment house is
a company that is designed to do all your "dirty work". They will
take your orders through an 800 number with live operators who will keep
track of your customer data base, provide some customer service, process
credit cards, and ship out orders. In other words, they make running your
business completely hands free. These companies have their own merchant
credit card accounts and will let you use them to process your orders for a
fee. The fee is usually a 5%-6% discount rate instead of the normal 2% to
3% you would pay if you had your own accounts.
If you are only processing a few thousands dollars
worth of orders every month, this is the way to go. But if you are doing
more business than that, it is more cost effective to get your own,
merchant credit card accounts. Also, please note that most fulfillment
houses will only allow you to charge orders to their credit card account
when the orders come in through the 800 number line (they will not let you
use their credit card account for direct sales from the Internet), which
can cause problems if you are doing any kind of volume.
As mentioned we deal with MWC at (1-800-642-9378).
Ask for Jeannie, she is a sweetheart and will help you to the best of her
ability.
Details of #4: As I mentioned above, I do not recommend using a
"transaction company" as it is just to much hassle for the amount
of sales you will lose (which will be almost nil).
Details of #5: These third party billing companies let you use
their merchant accounts. Your page would link to their order form and they
charge the customers credit card. They then mail you a check for all sales
20-60 days after the sale (the time delay before you get paid depends on
the company you are dealing with and the plan you have chosen with them).
These companies charge anywhere from $200 to $800 for set up fees and then
a percentage of each sale (between 5%-15% depending on your volume and the
plan you pick). It can get expensive, but if you have a high markup item
you are selling or if you are doing really low volume in sales, it may be a
solution. My opinion is to always get your own merchant accounts as they
can be obtained for next to nothing these days. However, one great
advantage to these third party billing companies, is that if you are a
foreign company that wants to accept credit cards and charge your customers
in US dollars, it is a way for you to instantly start accepting credit
cards for a lower cost in comparison to getting your our US merchant
accounts (which can cost a few thousand dollars if you are a foreign
company). The most well known company for this is Internet Billing
Company at http://www.ibill.com
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